Rachel Lewis a 63-year-old council worker from Ross-on-Wye in Herefordshire has got rid of her electric kettle. It seems a strange thing to do, but in actual fact, she has switched and installed a boiling water tap instead as to her surprise it uses less power.
On top of that, she has also replaced her lights with LED bulbs, started washing up more by hand, all because of the information she learnt from a smart, briefcase-sized battery installed in her home a few months ago by Scottish Power, one of the energy giants.
“We can see on our IPad what we are using at all times,” she said, “We were surprised to find out that the dishwasher was one of the biggest energy users.”
They are a part of a first-of-its-kind pilot project by one of the big six energy suppliers. Scottish Power has installed approximately 50 batteries in British homes with solar, in efforts to try to understand how the technology paired with real-time data fed to a smartphone app, translates to bills. Rachel Lewis’s has dropped by a fifth already.
It seems like a strange experiment for one of the big six considering battery storage technology is threatening to capsize it and the rest of the industry.
Since the energy industries, highs in 2007 the market values of the top utilities have shrunk by more than €400bn losses on a scale similar to the big banks in the wake of the financial crisis and the future doesn’t look much better.
Paul Massara former chief executive of Npower recently said: “The energy supply business is facing a life or death moment.”
Why did he say this? Well, there are three main reasons impacting this; climate change rules are snuffing out dirty old power plants with astonishing speed, with four coal-fired stations having shut since March.
The second is plunging fossil fuel prices and the third is renewable technologies which were for years reliant on government subsidy, have become so cheap that they can be built with little or no support. Solar panel costs have plunged 70% in five years.
This has caused an explosion of what the industry calls “distributed generation.” Replacing the few dozen giant power plants are hundreds and thousands of wind turbines and solar panels springing up with most of these not owned or operated by the big six. These giants are quickly being cut out of the power production game and being pushed out of the supply market as web-savvy supply companies are luring their customers away with better deals and better customer service.
In 2012 just 1% of British homes were supplied by non-big six companies with this figure now closely reaching 15% and rising.
Amongst this struggle for the big six to keep customers a fourth factor has emerged that threatens to supercharge the revolution: batteries.
For decades’ energy storage has been the holy grail for the industry with intermittent sources such as wind and solar power, it has been an Achilles heel. The need for viable energy storage solutions has been much awaited, with there are even times where the national grid is paying wind turbine owners to turn off during low demand times because it has nowhere to send the power.
The dawn of cheap lithium-ion batteries that fill up at peak supply times and discharge when demand spikes mean renewables are becoming far more reliable.
“Storage could help maximise the benefits and minimise the costs of secure, affordable and clean energy in the UK. I want to see the development of a viable and sustainable storage market at all levels, including in people’s homes.” Says Amber Rudd, Energy Secretary.
Driven by the electric car industry we have seen lithium-ion battery prices half in just 3 years and it is expected to drop further. £2,000-£4,000 for a household model is still too expensive for most, however, there are companies that have been devising solar and storage deals that require no upfront cost, instead, you enter into a service contract similar to your phones.
The first council has signed up to a similar deal and are due to fit 10,000 homes with solar panels and energy storage.
Simon Virley, UK chairman of KPMG’s energy advisory practice and a former Cabinet Office official, said such contracts raise the prospect of homes becoming largely self-sufficient. “This presents a significant challenge for the conventional power generators. They have to find a way to make money by selling a lot less of the product they produce.”
This brings into questioning as to why the government seems set on investing in nuclear energy, as Hinkley Point C in Somerset is set to be the most expensive power station in history. The £18bn project has been delayed once again, will it ever open?
Hinkley may be the wrong technology at the wrong price but the theory behind it remains sound. 5 years ago there were virtually no solar panels installed across Britain to now having over 870,000, batteries are coming and Centrica are installing 4,000 smart meters each week.
The industry is transforming but until we can make the big switch to zero emissions we will need to rely on a fleet of big power stations to ensure the lights stay on. These will probably be a mix of cleaner burning gas-fired and nuclear plants.
However, the point that doesn’t appear to have sunk in yet is that we will need far less back-up than is being envisaged, given the pace of which renewables and battery storage are developing. We are already seeing consumption falling by about 1%-2% each year.
We are already seeing numerous energy suppliers diversifying their business into new areas in preparation for this industry change. It is a clear sign to the world that the energy industry will no longer be the same as our journey to a cleaner energy future closes in.